Client Success Story

Client Success Story: $380,000 Federal Income Tax Resolved with a Refund Through Expert Tax Resolution Services

At Carlsen Partners, we specialize in uncovering overlooked financial details that can drastically impact a client’s tax liabilities. One of our most remarkable success stories involves a client who faced an overwhelming federal income tax liability of $380,000. Through diligent analysis and expert tax resolution strategies, not only was the entire liability eliminated, but the client also received a refund.

The Situation

Our client had entered into a significant financial arrangement by lending a substantial amount of money to their corporation. Unfortunately, due to business challenges, the corporation failed to repay the loan and eventually declared bankruptcy. At the time of filing the client’s tax returns, this critical piece of information—the non-repayment of the loan—was not taken into account.

As a result, the IRS assessed a tax liability of $380,000, not realizing that the client had suffered a substantial financial loss that qualified as a nonbusiness bad debt deduction.

Our Tax Resolution Approach

After thoroughly reviewing the client’s financial and tax documents, we identified the overlooked bad debt—the unpaid loan to the bankrupt corporation. Under the Internal Revenue Code, when a bona fide loan becomes wholly uncollectible and is not repaid, the loss may be treated as a short-term capital loss if it’s a nonbusiness bad debt.

We compiled comprehensive documentation, including:

• Loan agreements and transaction records
• Evidence of the corporation’s bankruptcy
• Proof of the client’s efforts to recover the funds
• Legal and financial statements confirming the total loss

We submitted a formal claim to the IRS, amending the client’s prior tax returns and clearly outlining the case for recognizing the bad debt deduction.

The Outcome

The IRS accepted our position. As a result:

• The entire $380,000 federal tax liability was eliminated
• The client received a refund, reversing the previous assessment

This case highlights the importance of accurate tax representation and how seemingly minor oversights—like an unaccounted bad debt—can lead to enormous tax consequences if not properly addressed.

Need Help with Tax Issues?

If you’re facing significant tax debt or believe your tax returns may not reflect your full financial situation, you may have options. Our team of experienced tax professionals can help you:

• Review and amend past returns
• Identify potential deductions or overlooked losses
• Represent you before the IRS
• Pursue resolution strategies to eliminate or reduce tax liabilities

Contact Carlsen Partners today to schedule a confidential consultation and explore how we can resolve your tax challenges just like we did for this client.